On Monday, Wolfe Research reiterated its positive stance on Meta Platforms Inc. (NASDAQ: NASDAQ:META), maintaining an Outperform rating and a $730.00 price target for the company's shares. The stock currently trades at $604.63, near its 52-week high of $638.40, reflecting strong market confidence. According to InvestingPro analysis, Meta maintains a "GREAT" financial health score of 3.22, supported by impressive gross profit margins of 81.5%.
The research firm's analysts believe that the market has yet to fully account for the potential financial benefits of Meta's initiatives in video unification and Threads monetization. According to Wolfe Research, these factors are not fully reflected in the consensus estimates, which could mean an upside for the company's advertising revenue and earnings per share (EPS).
The firm's forecast for Meta's fiscal year 2026 EPS stands 5% above the consensus, driven by the potential impact of video unification on the company's ad revenue and EPS. With a current P/E ratio of 27.65 and strong revenue growth of 23.06% over the last twelve months, Meta's fundamentals support this optimistic outlook. InvestingPro subscribers have access to 13 additional key insights about Meta's growth potential and financial health, along with comprehensive Pro Research Reports that provide deep-dive analysis of the company's performance.
Wolfe Research's estimates suggest that Meta's 2025 EPS could exceed the Street's expectations by 5.5%. The analysts have quantified the effects of video unification and Threads monetization, estimating that Threads could generate $3 to $4 billion in revenue in 2026. They see this as a growing opportunity beyond that year.
Meta began the process of unifying its video player across its platforms in June 2024, aiming to shift the content mix towards more short-form videos. Since the rollout of the unified video and prediction systems, Facebook video time has increased by 10% year-over-year. Additionally, Meta introduced full-screen immersive viewing in UCAN in October 2024, with plans to scale up in early 2025. Wolfe Research views the transition of legacy video as an underappreciated factor by the Street, noting that Reels time on Facebook is only 33% of total video hours, compared to Instagram Reels at 50%.
The analysts at Wolfe Research expect that more than half of the time spent on Facebook will be dedicated to video, with short-form videos making up over 40% of the mix. They predict these videos will monetize at over $3 CPM with an ad load exceeding 30%. Regarding Threads, the firm anticipates a revenue opportunity of $3 to $4 billion in 2026, assuming an ad load and monetization rate comparable to Twitter on a per-session basis, with around 785 million monthly active users (MAUs) by the end of 2026.
With Meta's current market capitalization of $1.53 trillion and next earnings report due on January 29, 2025, investors seeking detailed analysis of Meta's growth initiatives can access comprehensive valuation metrics and expert insights through InvestingPro's extensive financial toolkit. Wolfe Research suggests that the revenue potential from Threads is not yet fully included in consensus estimates and presents an attractive monetization opportunity in the mid-term.
In other recent news, Meta Platforms Inc. has been the subject of several significant updates. Wolfe Research recently increased its price target for Meta from $670 to $730, maintaining an Outperform rating. The firm anticipates Meta's financial performance to exceed current estimates, citing potential growth factors such as the integration of video across platforms and potential returns on invested capital from artificial intelligence advancements.
Additionally, Meta recently appointed Joel Kaplan as its new Chief Global Affairs Officer, a move that has drawn considerable attention. Kaplan is expected to take over key responsibilities including Facebook's content policy and elections.
Analyst firms such as JMP Securities and RBC Capital have also expressed confidence in Meta's growth potential. JMP Securities increased the price target for Meta to $750, maintaining a Market Outperform rating, while RBC Capital maintained its Outperform rating and raised its price target to $700. Both firms highlighted the company's advancements in artificial intelligence as key growth catalysts.
Canaccord Genuity also maintained a positive stance on Meta, raising the company's price target from $700 to $730 and recognizing the company's growth prospects in ad creative generation and business messaging.
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